Conclusion, Investment Implications, Strategy
Royal Gold, Inc.(RGLD) appears to be resuming its March advance following a 22% correction from the early August highs. A sustained rise above the $118.68 area would help confirm this and target a 23% rise to $147.64. This is an Asbury Value idea.
Analysis and Rationale
Royal Gold, Inc.(RGLD), together with its subsidiaries, acquires and manages precious metal streams, royalties, and related interests. It focuses on acquiring stream and royalty interests or to finance projects that are in production or in development stage in exchange for stream or royalty interests, which primarily consists of gold, silver, copper, nickel, zinc, lead, cobalt, and molybdenum. As of June 30, 2020, the company owned interests in 187 properties on 5 continents, including interests on 41 producing mines and 16 development stage projects. Its stream and royalty interests on properties are located in the United States, Canada, Chile, the Dominican Republic, Australia, Mexico, and internationally. Royal Gold, Inc. was founded in 1981 and is based in Denver, Colorado.
Chart 1 below plots RGLD daily since January, highlighting its current test of major underlying support at its 200-day moving average — which has been occurring since late September. Not shown is that a number of market internals are starting to improve as RGLD has been testing this major support, currently at $118.68.
A sustained rise above the 118.68 area would target a retest of 147.64.
Chart 1
Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $114.99 area, a long entry price of $119.84 would provide a 1:5.7 risk/reward ratio (risking $1.00 to make $5.70) with an initial risk of 4.0%.
Table 1
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Please consult the table showing our Asbury 6 key market metrics to help determine if this investment is suitable for you.